Currently sitting in my little RV at Canyon Hot Springs Campground in Albert Canyon.
Where is Albert Canyon? About 20 minutes west of Rodgers National Park and 30 minutes east of Revelstoke, BC.
What is Albert Canyon? At one time Albert Canyon was a busy little place. It was a small CP rail community. At the peak it had 20 to 30 families, a sawmill, mill shop, general store and a school house. The community was home to the “diesel pushers” that helped push the trains up through a pass. It is a scenic destination where the passenger trains would stop so the passengers could get out and see “Albert Canyon”. Today the “community” consists of a couple of full time residents and another five or six seasonal residents.
Why a trip to Albert Canyon? Last summer when Ryan (oldest son) returned from his spring/summer work in McCarthy Alaska) he arranged to spend his quarantine on a property in Albert Canyon. He was interested in a property that was for sale….so Kim and I drove out to check things out with him. Turned out he didn’t fall in love with the original property but he reached out to another owner and negotiated the purchase of just under 18 acres on the south side of the Trans Canada highway. The property is just acreage. It has never been built on. Guessing it has been 100 years since it was last logged. It has some giant cedars (10 feet around) and all kinds of very large trees. Immediately behind the property is crown land that stretches for miles….the entrance to a playground for Ryan and his back country activities. Albert Canyon is also one of the launch places for Selkirk Tangiers Helicopter skiing …..and where Ryan will be working this winter.
The trip out here was to help construct a shed. The shed was determined to be a priority as he lives either in his van or in a small travel trailer. This was his first “acquisition” and it was going to be followed by a lot of smaller additions that would not do well in his van or trailer (chainsaw, shovel, rake, pick ax, etc) so he thought a shed made sense so he would have somewhere to store his new “toys”.
Ryan was receptive to some help as the help was going to supply many of the tools needed to build the shed. So Kim and I headed west. From our cottage on Sausage Lake it takes five long days of driving (47 hours at regular speeds and we are in an RV). Kim visited with Ryan for a few days then we drove to Kelowna and flew back to Hamilton to attend a wedding in St. Catherines. After the wedding Kim drove back to the cottage and returned to Kelowna and drove back to Albert Canyon. Plans are to help Ryan until late September when I will drive back home to Andover MA for a couple of weddings.
The shed construction is “progressing”. A bit slow but we are making progress. Lots of comments to add on the construction in the next post…..and it has been interesting.
Little background before discussing the account. I am helping my oldest son, Ryan, build a shed on his newly acquired property in Albert Canyon, British Columbia.. The property is about 15 miles west of Rodgers Pass National Park in the Rocky Mountains. It receives up to 40 feet of snow a year….a good thing if you love back country ski touring. Building a shed isn’t that tough an assignment…..unless you decide to do it in the Rocky Mountains on a property with no hydro or water. Battery powered skil saw works okay…..but the charge doesn’t very long when you are cutting “rough lumber” (when a 2 x 6 is really 2 inches by 6 inches). The wood is sourced from a local sawmill in Revelstoke. Some of it Douglas fir…..not a lot of fun to nail as the 3 1/2 nails bend about 50% of the time. Cutting the wood with hand saws….another whole experience. Great for conditioning…not so great for productivity.
YTD the IB Account is generating a return of $76,711 or 22.3%. The performance is similar to what the SPY has generated. No complaints….but it would be nice to outperform the SPY as it would be much easier to just buy the index and hold it!
NIO remains a hard one to figure out. It looks like a good idea…until I establish a position. CFLT has been a nice recent add.
On April 1 we purchased 100 shares of ABT and established a covered call. At the time we were following the bullish comments of CEO during the Q1 earnings call. Initially the stock increased in price (blue line is stock profit/loss). Unfortunately the optimistic comments from the CEO were premature and the company revised earnings and revenue projections causing the stock to drop. Following the drop we added short puts to the strategy as I didn’t mind buying more shares of the company if we got assigned. Profitability of the puts is represented by the orange line. The stock has slowly climbed back. The positions are currently generating a profit of $1,237 between the stock, options and dividends.
Current option position – naked on 3 short puts (Sep 17 $123).
We have also collected $90 in dividends. Overall return is 11.2% or 32% annualized.
We opened a covered call on AMT on Apr 1, 2021 (so far it hasn’t been an April Fool joke!). The strategy is working well. In addition to collecting the option premiums we have also received $251 in dividends. Stock appreciation is generating the bulk of the profit. The appreciation has forced us to “roll up” at losses resulting in a net loss on the options of $639. Pleased with the overall profit of the strategy……should sell higher strike calls. We have rolled the options 8 times and been assigned once. Position is with 100 shares of stock and selling 1 call.
Charts below shows the daily evolution of the stock, option, dividend and net profit.
We have rolled the options 8 times and been assigned once over the 102 days.
YTD the account is up almost 16%…..which is in line with the goal of 1-2% growth per month. The returns were much higher in 2020 but it was much easier to generate returns last year. We are more conservative this year with almost a third of the account in cash. Last week the account hit a new high for the first time since late April.
Table below is the current portfolio. All positions have/had call options written against the stock. ABT also has a short put option written as I would be okay with getting assigned and increasing the position. The put was written when the stock recently dipped (after reducing revenue and earnings guidance) and I was looking for a bounce back.
CFLT is a new position opened following their recent IPO. It should be an interesting stock to follow.
10 of the 12 positions are net profitable. Overall the options are generating negative returns in 6 of the 12 positions. I have been writing further “out of the money” strike prices to try and improve this.
Dexcom (DXCM) has been on a roll lately resulting in higher profits on the stock but forcing us to “roll up” at losses.
NIO remains a challenge as my timing never seems to match up. When the stock drops I say “why am I playing with such a volatile Chinese based stock and I sell….only to get pulled back in with all the hype and high premiums.
BCRX has been a great performer generating $86,137 in net profit so far. Option premiums are great and stock has performed well over the past year. PODD (Insulet) was also a new addition to the portfolio. Premiums are surprisingly high.
Today we closed our remaining June SPY Iron Condor (it has 21 DTE) and opened a Jul 30 IC. We currently have 9 open IC’s in the month of July. Profitability of the ladder has been improving and reached a new high today of $4,686. This is a 9% return on capital or 26% annualized. Capital required to carry the positions is $53,463 (equivalent to max loss of all the positions). The 26% annualized return has been steadily improving over since the low in late April. Although max loss is rarely incurred the risk/reward ratio needs to be monitored.
SPY volatility has reduced during the recent run up, decreasing the premium received when we open positions.
Open positions are in the table below. Colors break out the individual IC’s.
On Friday I was assigned on a covered call strategy for NIO. We opened the position 9/16/20 and have been rolling the short calls since then. I had an order in to roll the options but the order did not get filled and I was not able to check and adjust the order…..so I end up with a short term capital gain instead of holding on for another 107 days to get to long term capital gains.
We did not maximize the profit of the position. In early February before NIO stock started trending down the position had a profit of over $32,000 (black line in the graph below).
Overall NIO has been a good stock for a covered call strategy due to the excellent option premiums. Both the stock and options contributed to the overall profit…..a difficult combination to achieve. I will reopen a new CC strategy in NIO in the near future.
Yesterday life was too busy and we didn’t roll up our expiring DVN short calls….so we got assigned. When we entered the position on 5/20 we were planning on collecting the dividend of $.34 (ex div 6/11). Unfortunately the stock got called away. Return on Capital is good so not complaining…but missing $340 of dividends. We will likely reopen a similar position on Tuesday morning to capture the dividend.
Graph below shows the daily profit/loss for the position since opening. The drop in the blue line (stock) and increase in orange line (option) reflects the assignment.
Over the past year I have “managed” a covered call position on Amazon. During the year the short call options have been rolled 123 times. The rolls have been to keep the short strikes “at the money”. Both the stock ($83,839) and short options ($13,921) have both contributed to the profit.
The stock has dropped recently but gains from the options have offset some of the losses.
Reaching 365 days is a key part of the position strategy. The gains on the stock will now be taxed at the long term capital gains rate of 15% (assuming we hold on to the gain) versus short term capital gains.
Chart above shows the daily profit/loss for the stock/option and net starting January 24th.